The Effects of Bitcoin ETFs On the Market – Coinbase Report

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• According to a report published by Coinbase, if approved in the United States, spot bitcoin (BTC) exchange-traded funds (ETFs) will open up cryptocurrency markets to new classes of investors.
• Coinbase states that the ETF narrative brings more focus to Bitcoin at an opportune time, as the world has ‘fewer safe-haven alternatives against rising geopolitical tensions and increased economic dysfunction.’
• ETFs are expected to lay the groundwork for ‘a more regulated environment, significant growth in participation and demand.’

A report released by Coinbase, the largest cryptocurrency exchange in the United States, examines the potential impact of spot Bitcoin ETFs.

What Will Happen if Bitcoin ETFs are Approved?

According to a report published by Coinbase, if approved in the United States, spot bitcoin (BTC) exchange-traded funds (ETFs) will open up cryptocurrency markets to new classes of investors, such as registered investment advisors (RIAs), pension funds, and institutions traditionally unable to access this asset class.

However, there is more to the story than just providing access to new capital. The opportunity ‘could be much larger than enabling new capital to enter the crypto market,’ as ETFs ‘will alleviate restrictions on large money managers and institutions buying and holding Bitcoin, which will increase liquidity and enhance price discovery for all market participants,’ says Coinbase’s Head of Institutional Research, David Duong.

Moreover, having an investment vehicle that meets ‘key regulatory and compliance requirements’ can also open the door to new products, potentially replicating and expanding existing crypto offerings for accredited investors, the note highlights.

Billions could be added to the crypto market

In the long run, this could add billions to the total crypto market cap, and ETFs are expected to lay the groundwork for ‘a more regulated environment, significant growth in participation and demand.’

Coinbase states that the ETF narrative brings more focus to Bitcoin at an opportune time, as the world has ‘fewer safe-haven alternatives against rising geopolitical tensions and increased economic dysfunction.’

The report notes, ‘the U.S. Treasury bond market is shaken, and the U.S. banking sector is still quite vulnerable, making Bitcoin increasingly attractive as an alternative to the traditional financial system leading up to 2024.’